ELECTRICAL CONTRACTORS (ECs) and low-voltage installation firms that want to maximize their profits can do so in a number of ways. One is to sell maintenance agreements that contain a recurring revenue component. An even better way is to offer 24/7 central station monitoring with every fire and burglar alarm system installed.
Traditionally, ECs are responsible for an overwhelming percentage of the low-voltage systems that go into new construction, including fire alarms and intrusion detection systems. Unfortunately, many contractors leave a huge chunk of cash on the table by allowing a specialty firm to take over the account at the end of the job, subsequently selling the client the central station monitoring they need.
For example, when a sprinkler system goes in a new facility, code requires it be monitored by either a supervising or central station facility. All too often, the EC contracts with a specialty low-voltage company to provide the engineering, equipment, programming/testing and final connections required to make this happen. Naturally, it’s this other company that ends up selling the client the central station monitoring they are required to have.
One of the problems is that a typical EC fails to visualize itself as an alarm company. Moreover, ECs do not realize the profit potential associated with monitoring the alarm systems they install.
Third-party central station
One of the most important aspects of central station monitoring to the EC is simply understanding how it works. The first step is to understand how a large percentage of alarm companies monitor alarm systems.
Offering 24/7 central station monitoring does not mean the EC owns his own central station facility. Instead, an overwhelming percentage of traditional alarm companies contract this service out to a third-party central station company that does nothing but monitor for other companies.
Third-party companies are equipped to monitoring alarm systems of almost every kind—be it fire or burglar. They also offer sprinkler system monitoring, elevator emergency phone and other specialty services.
A typical central station contains one or more digital alarm communicator receivers (DACRs) to which alarm systems send signals by a variety of means. This includes normal telephone connections, cellular, proprietary radio and the Internet.
Third-party central stations commonly contract with alarm companies for a certain number of dollars per month per account. Common fees range from $2 to $6 a month for basic monitoring. This equates to a monthly fee to the client ranging from $18 to $30. The exact fee depends on the risk and size of the system involved. It also depends on what the local market will bear.
On the client side, most of the alarm panels that the EC installs already have a digital alarm communicator transmitter (DACT), also called a digital communicator in the security portion of the market. Almost every alarm panel of any worth comes with a DACT. There also are slave DACTs available that are used to monitor sprinkler systems. The DACT is what interfaces with a DACR.
Another source of revenue related to 24/7 monitoring is cellular backup. The use of cellular backup is directly related to the threat of someone cutting the client’s phone lines, which happens more often than most of us realize.
A cellular backup unit, which attaches to the alarm system and phone lines, is able to detect when phone service has ceased. It will then transmit all alarm signals to the central station either through the traditional telephone system or through the Internet.
Billing the client for monitoring
For those ECs that decide to offer 24/7 central station monitoring, a billing system must be instituted. This system can be part of the EC’s regular computerized billing system, or it can be as simple as 12 locator cards labeled with each month contained in a box with index cards.
The best way to charge for monitoring is yearly. For example, if a client agrees to pay $20 per month, a bill should be sent for the full year at $240.
Some clients would rather pay as they go, however. In such a case, you should bill by the quarter. Here you may want to recoup some of the ongoing administrative costs by charging them a few dollars more a month, which also provides the client with an incentive to pay by the year.
In an upcoming column, I will continue our discussion with how central station monitoring and cellular backup works. I will discuss programming issues and innovative ways to sell.
COLOMBO is a 32-year veteran in the security and life safety markets. He currently is director with FireNetOnline.com and a nationally recognized trade journalist located in East Canton, Ohio.